Please E-mail suggested additions, comments and/or corrections to Kent@MoreLaw.Com.

Help support the publication of case reports on MoreLaw

Date: 10-04-2019

Case Style:

METAL INTERESTS, LTD. vs. INTERESTING INVESTMENTS, LLC. and WILLIAM GLICK

Case Number: C-180518

Judge: Beth A. Myers

Court: COURT OF APPEALS FIRST APPELLATE DISTRICT OF OHIO HAMILTON COUNTY, OHIO

Plaintiff's Attorney: If you need a real estate Attorney in Ohio, call Kent Morlan at 888-354-4529.

Defendant's Attorney:

Description:





MoreLaw Suites

Legal Suites and Virtual Offices In Downtown Tulsa
Petroleum Club Building
601 South Boulder

918-582-3993 or info@morelaw.com



Metal Interests, Ltd., (“Metal Interests”), owned a commercial
property consisting of a tavern and several apartments. Steven Campbell, the
president of Metal Interests, was the sole member of Interesting Investments, LLC,
(“Interesting Investments”). Interesting Investments operated the tavern on the
premises and was the holder of an Ohio liquor permit.
{¶3} On March 11, 2011, Campbell sold his membership interest in
Interesting Investments to Mark Hoffman, who then leased the tavern premises from
Metal Interests. Near the end of 2011, Campbell informed his attorney, Greg Nolan,
that Hoffman wanted out of the tavern business, so Nolan prepared documents for
the transfer of the business back to Campbell.
{¶4} On December 30, 2011, Hoffman and Campbell entered into a
repurchase agreement whereby Hoffman sold his sole membership interest in
Interesting Investments back to Campbell for $500. On the same date, Campbell
filed an application with the Ohio Division of Liquor Control for the change of LLC
membership interest in Interesting Investments from Hoffman to Campbell so that
the liquor permit could transfer back to him.
OHIO FIRST DISTRICT COURT OF APPEALS

3
{¶5} On February 1, 2012, while the application was pending with the
Division of Liquor Control, Interesting Investments entered into a short-term
“Management Contract” with William Glick whereby Glick was employed to operate
the tavern. By its terms, the management contract would terminate upon the
approval or denial by the Division of Liquor Control of the transfer of the
membership interest from Hoffman to Campbell.
{¶6} On February 2, 2012, Campbell entered into a “Membership Interest
Sale” agreement with Glick, whereby Glick purchased Campbell’s entire membership
interest in Interesting Investments and its assets, including commercial equipment
and its liquor permit. The purchase price was $67,500, $15,000 of which was paid
upon execution of the purchase agreement. Glick executed a promissory note for the
remaining $52,500, which was secured by a mortgage on certain real estate.
{¶7} On the same day, Metal Interests and Interesting Investments entered
into a lease agreement for the tavern portion of Metal Interests’s commercial
property. The lease period was for five years, with an option to renew. Paragraph 16
of the February lease stated:
CONDITION OF THE LEASE. Both parties are aware that this
premises is designed as a tavern/restaurant. Should Tenant complete
the terms of this Lease and pay the Promissory Note in full, he may
remove the Ohio Liquor Permit to a new location of his choosing.
During the term of the Lease and the Promissory Note, the Ohio
Liquor Permit Number 4146809 D2 D2X D3 D6 shall remain at the
lease premises.
Should tenant not complete the terms of the Lease and/or not pay the
Promissory Note in full, Tenant agrees to transfer to the Landlord or
another legal entity the Landlord may chose [sic], the Ohio Liquor
Permit Number 4146809 D2 D2X D3 D6.
OHIO FIRST DISTRICT COURT OF APPEALS

4
{¶8} In the meantime, however, Nolan realized that the parties should not
have executed the documents before the Division of Liquor Control approved the
transfer of the membership interest from Hoffman back to Campbell. Nolan testified
that without the approval of the transfer, Campbell would not be able to transfer the
membership interest to Glick. So he informed Glick and Campbell that they would
have to wait until after the membership interest in Interesting Investments
transferred from Hoffman to Campbell. According to Nolan, the transfer occurred
on March 23, 2012.
{¶9} On March 29, 2012, Glick and Campbell appeared at Nolan’s office
where they executed another “Membership Sale Agreement,” which contained the
same terms as the one dated February 2. The parties also executed another five-year
lease for the tavern property and certain equipment, ending on January 31, 2017.
Paragraph 16 of the March lease differed from the one executed in February in that it
provided:
CONDITION OF THE LEASE. Both parties are aware that this
premises is designed as a tavern/restaurant. It is imperative for the
Landlord to maintain an Ohio Division of Liquor Control Permit at
such leased premises. At the signing of this Lease an Ohio Division of
Liquor Control Permit #4146809 D2 D2X D3 D6 is assigned to this
leased premises. At the termination of this lease or any other
surrender of the leased premises, Tenant agrees to transfer
to Landlord or another legal entity Landlord may form the
Ohio Division of Liquor Control Permit assigned to the
permit premises. In exchange for such transfer Landlord
agrees to pay tenant the sum of $10,000 minus any unpaid rent
owed to Landlord and minus any taxes, unemployment, withholding,
or workers compensation owed to the State of Ohio in order to secure
OHIO FIRST DISTRICT COURT OF APPEALS

5
the successful transfer of the Ohio Division of Liquor Control permit
from Tenant to Landlord. Such sum shall be paid by Landlord to
Tenant within 3 business days of the successful transfer.
(Emphasis added.)
{¶10} In October 2016, Nolan sent a letter to Glick on Campbell’s behalf to
advise Glick that Metal Interests did not intend to renew the lease and that
Interesting Investments had failed to maintain insurance on the property as required
under the lease. Nolan also demanded that Glick vacate the premises by January 31,
2017, and he informed Glick that the balance due on the promissory note would be
due at that time.
{¶11} On January 23, 2017, Glick and Interesting Investments, through their
attorney James Arnold, notified Campbell that they were exercising their option to
renew the lease agreement and that they would be delivering a check for the
February 2017 rent.
{¶12} On January 25, 2017, on behalf of Campbell and Metal Interests,
Nolan wrote to Arnold and asked him to provide proof of insurance for the period of
the lease and proof that Interesting Investments had exercised its option to renew
the lease in writing, 120 days prior to January 31, 2017, as required by the lease. He
stated that he had instructed Campbell not to accept the February rent payment. On
February 2, 2017, Metal Interests gave Interesting Investments a notice to vacate the
premises by March 4, 2017.
{¶13} On March 3, 2017, Glick paid the $30,755.23 balance owed on the
promissory note, and vacated the tavern premises the following day. He refused,
however, to transfer the liquor permit back to Metal Interests.
{¶14} On April 6, 2017, Metal Interests sued Interesting Investments and
Glick for breach of the lease agreement and for property damage to the premises and
sought injunctive relief to compel the return (buyback) of the liquor permit.
OHIO FIRST DISTRICT COURT OF APPEALS

6
Interesting Investments and Glick filed an answer and a counterclaim asserting that
Metal Interests had breached the lease by refusing to reimburse them for utility
payments for the apartments on the premises.1
{¶15} Following a bench trial, the trial court entered judgment in favor of
Metal Interests on its breach-of-contract claim and ordered Interesting Investments
and Glick to take the necessary steps to transfer the liquor permit back to Metal
Interests, as required under the March lease. The court entered judgment in favor of
Interesting Investments and Glick on Metal Interests’s property-damage claim, and
in favor of Metal Interests on the breach-of-contract counterclaim.
The Appeal
{¶16} In a single assignment of error, Interesting Investments and Glick
argue that the trial court’s judgment ordering them to take steps to transfer the
liquor permit to Metal Interests was based upon insufficient evidence, was against
the manifest weight of the evidence, and was contrary to law. They contend that the
evidence demonstrated that they had not bargained for the condition in the March
lease that required the return of the liquor permit to Metal Interests. They also claim
that the evidence demonstrated that it would be unconscionable to enforce the
condition requiring return of the permit. In addition, they contend that Metal
Interests’s attempt to attach a security interest in the liquor permit is not authorized
by law.
{¶17} When reviewing an appeal from a civil bench trial, we apply a
manifest-weight standard of review. United States Fire Ins. v. Am. Bonding Co.,
Inc., 1st Dist. Hamilton Nos. C-160307 and C-160317, 2016-Ohio-7968, ¶ 16. We
determine whether the trial court’s judgment was supported by the greater amount
of credible evidence, and whether the plaintiff met its burden of persuasion by a
1 Interesting Investments and Glick abandoned their other counterclaims at trial.
OHIO FIRST DISTRICT COURT OF APPEALS

7
preponderance of the evidence. JAG Imperial, L.L.C. v. Literski, 1st Dist. Hamilton
No. C-110760, 2012-Ohio-2863, ¶ 10; Eastley v. Volkman, 132 Ohio St.3d 328, 2012
Ohio-2179, 972 N.E.2d 517, ¶ 19.
{¶18} Where, however, the trial court’s judgment is based upon a question of
law, we review the trial court’s determination of that issue de novo. United States
Fire Ins. at ¶ 17. The interpretation of a written contract is a question of law that we
review de novo. JAG Imperial at ¶ 11. In construing the terms of a written
agreement, the primary objective is to give effect to the parties’ intent, which can be
found in the language they chose to use in the agreement. Warmack v. Arnold, 195
Ohio App.3d 760, 2011-Ohio-5463, 961 N.E.2d 1165, ¶ 25 (1st Dist). If a contract’s
terms are clear and unambiguous, then the plain language of the contract governs
the parties’ rights and obligations. Id.
The Contract
{¶19} We begin our analysis with the four corners of the contract and find
that the language is clear and unambiguous: it requires tenant to transfer the liquor
permit back to the landlord at the termination of the lease. In consideration,
landlord will pay tenant $10,000. The undisputed evidence is that the lease
terminated. Therefore, in the absence of some legal defense, tenant is obligated to
return the permit and landlord is obligated to buy it back.
Unilateral Modification without Consideration
{¶20} Glick and Interesting Investments first argue that Nolan, on behalf of
Campbell, had unilaterally modified a material term in Paragraph 16 of the February
lease in the subsequent March lease without Glick’s knowledge or assent. They
contend that the modification was made without new consideration because they
gained “no benefit from the change.”
OHIO FIRST DISTRICT COURT OF APPEALS

8
{¶21} The trial court determined that, despite Glick’s testimony to the
contrary, Glick had signed the March lease. That finding is supported by the record.
At trial, Nolan, Campbell, and Nolan’s administrative assistant testified that they
witnessed Glick’s signing of the March lease at Nolan’s office. In addition, although
the trial court determined that no consideration was required for the modification,
Paragraph 16 in the March lease clearly provides for adequate consideration by
requiring Metal Interests to pay $10,000 for the transfer of the liquor permit.
{¶22} Consequently, we hold that the trial court’s judgment was not against
the manifest weight of the evidence. In addition, because the terms of the March
lease were clear and unambiguous, we hold that the trial court properly concluded
that Interesting Investments and Glick had breached the lease by failing to effectuate
the transfer of the liquor permit to Metal Interests at the termination of the lease.
Unconscionability
{¶23} Glick and Interesting Investments also argue that enforcement of
Paragraph 16 in the March lease would be unconscionable. They contend that Nolan
unilaterally modified Paragraph 16 into a “punitive term,” without discussion or
negotiation, resulting in unfair surprise.
{¶24} The party asserting unconscionability of the contract has the burden to
prove that the agreement is both procedurally and substantively unconscionable.
Taylor Bldg. Corp. of Am. v. Benfield, 117 Ohio St.3d 352, 2008-Ohio-938, 884
N.E.2d 12, ¶ 34. When considering procedural unconscionability, courts look to the
circumstances surrounding the parties’ bargaining, such as their age, education,
intelligence, business experience, and who drafted the contract. Id. at ¶ 44. When
considering whether a contract is substantively unconscionable, courts assess the
fairness and reasonableness of the terms of the particular contract. Hayes v.
Oakridge Home, 122 Ohio St.3d 63, 2009-Ohio-2054, 908 N.E.2d 408, ¶ 33;
OHIO FIRST DISTRICT COURT OF APPEALS

9
Harbour Portfolio VII, LP v. Pulley, 1st Dist. Hamilton Nos. C-150080 and C
150090, 2015-Ohio-4399, ¶ 7.
{¶25} A determination of whether a written contract is unconscionable is a
question of law that we review de novo. See Taylor at ¶ 37. When a trial court makes
factual findings supporting its determination that a contract is not unconscionable,
those factual findings should be reviewed with great deference. Id. at ¶ 38.
{¶26} Here, the trial court considered the conflicting testimony about
whether each party had been represented by Nolan, and noted that Campbell
testified that both he and Glick had paid for Nolan’s assistance in drafting the lease.
In addition, the court found that Glick was not an unsophisticated party who had
been unfairly disadvantaged in the bargaining process. The court noted that before
he purchased Campbell’s business, Glick had owned his own business for five years
and had experience with contract negotiation. Following our review of the record,
we hold that the March lease was not procedurally unconscionable.
{¶27} Although Interesting Investments and Glick contend that Paragraph 16
was “clearly overly burdensome and punitive” to them, they point to no evidence in
the record to support that assertion. Moreover, the contract provided $10,000
consideration to them in return. We find that they failed to meet their burden to
demonstrate that the March lease was substantively unconscionable.
Security Interest
{¶28} Finally, Interesting Investments and Glick argue that Metal Interests
attempted to attach a security interest to the liquor permit for performance of the
lease, and that enforcement and execution of that security interest should be denied
as a matter of law. However, the record demonstrates that there was no agreement
between the parties that treated the liquor permit as collateral. The contract is clear
and unambiguous and does not create a security interest.

Outcome: Under the clear and unambiguous terms of the March lease,
Interesting Investments and Glick agreed to transfer the liquor permit to Metal
Interests at the termination of the lease. When they failed to do so, the trial court properly determined that that a breach occurred and ordered them to take the
necessary steps to accomplish the transfer. Therefore, we overrule the sole
assignment of error and affirm the trial court’s judgment.

Plaintiff's Experts:

Defendant's Experts:

Comments:



Find a Lawyer

Subject:
City:
State:
 

Find a Case

Subject:
County:
State: